Monday, December 31, 2007

Today's NY Times and the Sunday Washington Post both had prominent pieces on the RIAA. Here is the link to the Times article, in Adam Litak's popular sidebar column. Here is a link to the Post's opinion.

The Liptak column details a brief filed by the Attorney General of Oregon to quash a subpoena directed to the University of Oregon to reveal the identity of students engaged in filesharing. The AG is reported to have accused the RIAA "of misleading the judge, violating student privacy laws and engaging in questionable investigative practices." The AG specifically targeted "the tactics of MediaSentry, an investigative company hired by the recording industry. He said the company seemed to use data mining techniques to obtain 'private, confidential information unrelated to copyright infringement.' He added that it may have violated an Oregon criminal law requiring investigators to be licensed." Cary Sherman, President of RIAA, is quoted as saying the industry had seen “a lot of crazy stuff” filed in response to its lawsuits and subpoenas. “But coming from the office of an attorney general of a state?” Mr. Sherman asked, incredulous. “We found it really surprising and disappointing.”

Mr. Liptak is taking the university's side: "No one should shed tears for people who steal music and have to face the consequences. But it is nonetheless heartening to see a university decline to become the industry’s police officer and instead to defend the privacy of its students."

The Washington Post article is about the Howell case in Arizona, well-covered litigation that raises directly whether there is a making available right (or "deemed distribution") as an adjunct of the distribution right. I think not: I think that all copyright owners have the burden of making out a primafacie case that infringement has occurred, and in the case of the distribution right, this means that a copy was actually distributed, not just made available for distribution. The Post however raises a different issue, what it perceives to be a shift in the RIAA's stance in the case. Here's how the article (by staff writer Marc Fisher) begins:

Despite more than 20,000 lawsuits filed against music fans in the years since they started finding free tunes online rather than buying CDs from record companies, the recording industry has utterly failed to halt the decline of the record album or the rise of digital music sharing.Still, hardly a month goes by without a news release from the industry's lobby, the Recording Industry Association of America, touting a new wave of letters to college students and others demanding a settlement payment and threatening a legal battle.Now, in an unusual case in which an Arizona recipient of an RIAA letter has fought back in court rather than write a check to avoid hefty legal fees, the industry is taking its argument against music sharing one step further: In legal documents in its federal case against Jeffrey Howell, a Scottsdale, Ariz., man who kept a collection of about 2,000 music recordings on his personal computer, the industry maintains that it is illegal for someone who has legally purchased a CD to transfer that music into his computer....The RIAA's legal crusade against its customers is a classic example of an old media company clinging to a business model that has collapsed.

The article also ties this in to the Thomas case in Minnesota:

The Howell case was not the first time the industry has argued that making a personal copy from a legally purchased CD is illegal. At the Thomas trial in Minnesota, Sony BMG's chief of litigation, Jennifer Pariser, testified that "when an individual makes a copy of a song for himself, I suppose we can say he stole a song." Copying a song you bought is "a nice way of saying 'steals just one copy,' " she said.

These last quotes are emblematic of how the rhetoric of theft and counterfeiting are being dangerously used to cover all unauthorized activity, whether it is fair use (in the case of copying for personal use), or anything else content owners don't want. Every act with a copyrighted is now deemed by content owners to be infringing unless they get paid or OK it.

One sees this calculated rhetorical shift in many forms, such as the industry legislative proposals and comments made by industry executives about them at press conferences, and in actual bills, such as the misnamed Pro-IP bill, which is alleged to address counterfeiting, but which contains a grab bag of goodies for RIAA for things like enhanced statutory damages and registration challenges. This new rhetoric of "everything anyone does without our permission is stealing" is well worth noting at every occasion and well worth challenging. It is the rhetoric of copyright as an ancient property right, permitting copyright owners to control all uses as a natural right; the converse is that everyone else is an immoral thief.

But despite Ms. Pariser's comments in the Thomas case (if accurately reported), in the Howell case, the RIAA is being unfairly maligned. I have read the brief (and you can too here). On page 15 of the brief, we find the flashpoint: "Once Defendant converted Plaintiffs' recordings into the compressed .mp3 format AND they are in his shared folder, they are no longer the authorized copies distributed by Plaintiffs."

I have capitalized the word "and" because it is here that the RIAA is making the point that placing the mp3 files into the share folder is what makes the copy unauthorized. The RIAA is not saying that the mere format copying of a CD to an mp3 file that resides only on one's hard drive and is never shared is infringement. This is a huge distinction and is surprising the Post didn't understand it. The brief also goes on to allege in great detail that the copies placed in the shared folder were actually disseminated from Howell's computer, thereby stating a traditional violation of the distribution right, even aside from the making available/deemed distribution theory. Its a good thing that the Post's motto is not "All the News That's Fit to Print."

Friday, December 28, 2007

David Byrne has a must read, lengthy piece in Wired for all interested in the music business. Here is the link. The article builds on Byrne's considerable experience in all angles of the business, along with good data and embedded links to interviews about a variety of subjects and groups. Byrne is not a bomb-thrower or an ideologue: he is someone who loves music and has spent his whole adult career forging innovative songs and ways of bringing innovative music to the public. The article is just as innovative, as it explores the traditional roles of labels, and how the business is evolving.

Thursday, December 27, 2007

The Fourth Circuit has issued an interesting opinion on the burden shifting involved in claims to recover defendant’s profits attributable to the infringement, but unfortunately, it marked the opinion as unpublished to deprive it of precedential value, indicating the lower courts continue to thumb their noses at Congress and the public, and the spirit of new FRAP 32.1, which requires courts of appeals to permit citation to unpublished opinions, but which does not restrict courts have stating they don't have precedential value: of what use is it to cite to something that has no precedential value? Not much.

It is one thing when the opinion is a one-page toss-off prepared by circuit staff counsel; it is quite another when, as here, the opinion is an extended one that contains significant statements of law about an important issue. The only solution to such intransigence seems to be legislation barring the courts from marking any opinion unpublished: all opinion should have the same potential value, with the only determinant being the quality of their reasoning.

The case is Phoenix Renovation Corporation v. Rodriguez, 2007 WL 4443328 (4th Cir. Dec. 17, 2007)(available here). The district court had granted plaintiff’s motion for summary judgment on liability, and denied defendant’s motion for partial summary judgment on the issue of damages for the copyright infringement, reserving the question for trial. After a three-day bench trial, the trial court found defendants were not liable for any damages. Defendant did not appeal the liability finding, but plaintiff appealed the lack of an award for defendant’s profits.

Section 504(b) reads in relevant part: “In establishing the infringer's profits, the copyright owner is required to present proof only of the infringer's gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work." In Bonner v. Dawson, 404 F.3d 290, 294 (4th Cir. 2005), the Fourth Circuit had held that §504(b) “creates an initial presumption that the infringer's profits attributable to the infringement are equal to its gross revenue,” and in Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 520 (4th Cir.2003), the court of appeals had held that once the copyright holder establishes the infringer's gross revenue, "the burden shifts to the infringer to prove either that part or all of those revenues are 'deductible expenses' ( i.e., are not profits), or that they are attributable to factors other than the copyrighted work."

The Phoenix court summarized the issue as follows:

In Bouchat, we established that because the phrase "gross revenue" in § 504(b) refers only to revenue reasonably related to the infringement, "a copyright holder must show more than the infringer's total gross revenue from all of its revenue streams" in order to meet its initial burden under the statute. Bonner, 404 F.3d at 294. Accordingly, before the burden-shifting provision of § 504(b) is triggered, the copyright owner must "demonstrat [e] some causal link between the infringement and the particular profit stream." Id.

As applied to the case at bar, the court wrote:

Here, in denying Appellees' Partial Motion for Summary Judgment as to damages for the copyright infringement, the district court found that Phoenix had met its initial burden of proof. First, the district court noted that Phoenix did not indiscriminately seek the totality of Appellees' profits without regard to the source, but rather "anticipate[d] presenting evidence at trial that [Appellees'] use of Phoenix's Interior Repipe Agreement enabled [them] to enter into 626 transactions in which they received approximately $2.6 million in revenue." Next, the district court identified three factors demonstrating a causal connection between the use of the Infringing Contract and the claimed revenue …. Finally, the district court stated that Phoenix had provided non-speculative evidence of a causal connection and determined that "[b]ecause the claimed revenue ha [d] a reasonable relation to the infringement, ... summary judgment for [Appellees] would be inappropriate." So what was the rub? The rub came in a different approach taken by the district court at trial. As the 4th Circuit put the matter:

Following the bench trial, however, the district court changed course, finding Appellees not liable for damages. The court found that Phoenix failed to provide evidence supporting each of its three purported causal links. With regard to Phoenix's theory that the contract assisted Atlantic in marketing itself to customers, the district court concluded that Appellees had presented credible evidence establishing that customers hired Atlantic for reasons such as its experience and price, not the appearance of its contract, while "Phoenix ha[d] not presented any evidence that supports this particular causation theory." It therefore deemed the "purported causal link ... mere speculation." The district court further concluded that although use of the Infringing Contract allowed Atlantic to comply with Virginia's requirement that residential contractors make use of written contracts for a time without incurring the expense necessary to do so, any cost avoidance was temporary and did not permanently contribute to Atlantic's revenues because Atlantic later paid an attorney to draft a new contract. Finally, the district court found that none of Atlantic's revenue was attributable to its use of the Infringing Contract in collecting balances owed because Atlantic only collected more money than it cost to enforce the terms of the contract on one occasion, and the proceeds from that collection effort were more than offset by the $7,000 Atlantic spent to collect $3,618 owed on another occasion. Moreover, Atlantic had proven unsuccessful in other collection attempts. The district court therefore concluded that "Phoenix ha[d] not proven the existence of a causal link between [Appellee's] infringement of the Re-Pipe Agreement and their gross revenue from polybutylene replacement jobs where the Infringing Contract was used." Accordingly, it determined that "the burden-shifting provisions of § 504(b) [were] inapplicable to this case" and Phoenix was not entitled to damages.

Plaintiff claimed foul:

Phoenix argues that the district court's about face improperly denied it the benefit of § 504(b)'s burden shifting provision, depriving it of damages to which it is entitled. Phoenix claims to have met its minimal initial burden of demonstrating some causal link between the infringement and the revenue stream by showing that (1) customers' obligation to pay Atlantic arose out of the Infringing Contract, and (2) Atlantic benefitted from the use of the contract, which allowed it to appear more professional, conduct its business in accordance with Virginia law, and collect payment from reluctant customers.Defendant not surprisingly disagreed:

Appellees counter that the district court correctly applied our holding in Bouchat that a defendant should prevail if either (1) there exists no conceivable casual connection between the infringement and a particular revenue stream, or (2) despite the existence of a conceivable connection, the copyright holder offers only speculation as to the existence of a causal link between the infringement and the claimed revenues. Bouchat, 346 F.3d at 522-23.The court of appeals agreed with Plaintiff:

As an initial matter, we agree with Phoenix that the district court erred in failing to shift the burden of proof to Appellees pursuant to § 504(b). Although Bouchat held that copyright plaintiffs may not meet their initial burden under the statute simply by submitting evidence of an infringer's gross profits from all of its revenue streams, in requiring proof of a causal link between the infringement and a particular profit stream or streams, we did not purport to saddle plaintiffs with an onerous evidentiary burden.The court then entered into a sustained review of Bouchat and Bonner:

Bouchat involved a suit for "infringer's profits" by the author of an original drawing that became the basis for the Baltimore Ravens football team's logo. The Ravens obtained revenue from a variety of sources, including a subset of merchandise sales, "minimum guarantee" shortfalls and "free merchandise" requirements established by the Ravens's licensing agent (National Football League Properties, Inc.), that could not fluctuate in response to consumer behavior. We held that Bouchat had not met his initial burden of proof under § 504(b) only with regard to those sources because Bouchat could not establish a conceivable connection between the revenue from the "minimum guarantee" shortfalls and "free merchandise" requirement and the copyright infringement. Bouchat, 346 F.3d at 524.Our subsequent decision in Bonner clarified the extent of the causal connection required under Bouchat. There, we distinguished Bouchat on the ground that Bonner was not seeking all gross revenues from a defendant with multiple streams of income, but rather only the revenue derived from the leasing arrangements of an infringing building. We concluded that because "[t]he building generating the funds was designed based upon Bonner's copyright ," Bonner had satisfied Bouchat's requirement of a causal connection between the infringement and the revenue stream. Bonner, 404 F.3d at 294. We reversed the district court's conclusion to the contrary, holding that the district court had "misinterpreted the level of connection between infringement and profits that is required under Bouchat " when it determined that Bonner had not met his initial burden because it was not clear that the building's design formed the basis of the profits from the lease. Id.; see also Konor Enter. Inc. v. Eagle Publ'ns Inc., 878 F.2d 138, 140 (4th Cir.1989) (holding that where a defendant's only product was a military telephone directory that infringed on a plaintiff's copyright, the burden of proof shifted to the defendant pursuant to § 504(b), because "[i]t [wa]s plausible, absent proof to the contrary, that all profits were a direct result of [the] infringement of [the] copyright").The court then applied its approach to the issue to the district court’s ruling:

In this case, the district court's summary judgment order correctly followed Bouchat and Bonner to conclude that Phoenix had met its initial burden under § 504(b) of demonstrating a conceivable connection between the copyright infringement and the revenue obtained from jobs on which Appellees used the Infringing Contract. Such a connection exists because customers' obligation to pay arose out of their contract with Atlantic and because it is conceivable that the Infringing Contract generated revenue by: (1) enabling Atlantic to attract customers by looking like a less expensive version of Phoenix; (2) comply with state law governing its business; and (3) collect past due balances. The district court erred in concluding to the contrary in the opinion and order entering the final judgment.Nevertheless, we agree with Appellees that this flaw in the district court's analysis did not affect the outcome of the case. A review of the record compels the conclusion that the district court's finding that Phoenix was not entitled to damages ultimately was based on its finding that the evidence was entirely one-sided, not on its allocation of the burden of proof. The court credited Appellees' evidence that none of Atlantic's revenue was attributable to the Infringing Contract and found that Phoenix had offered only speculation to the contrary. Thus, the district court's finding that Phoenix failed to supply any non-speculative evidence to counter Appellees' showing that Atlantic's revenue stemmed from sources other than the copyright infringement, if correct, compels the conclusion that Phoenix was not entitled to damages. As long as all this is, it represents merely a snapshot of a far longer discussion of prior case law and statutory interpretation, all of which brings me repeat the point raised at the beginning of the post: why an unpublished opinion? The court obviously took a great deal of care with the case and its opinion; it contains important glosses on the statute and prior case law. It should be published and able to be relied on by litigants in line with the purposes of new FRAP 32.1

Wednesday, December 26, 2007

In the late 1980s, when I was a Policy Planning Advisor to the Register of Copyrights, I went on a few U.S. Government delegations to Egypt in an effort to convince the Egyptian government to “improve” its copyright law. I went with good friends Joe Papovich of USTR (now at RIAA) and Richard Owens of the PTO (now at WIPO), as well as a chap from the State Department whose name I forget and wanted to forget even then. Somewhere, there are pictures of us riding camels at the Pyramids. On the taxi trip to the Pyramids, we drove by tens of thousands shantytowns where the children barely had clothes on, where there was no sewage disposal, no running water, no electricity, and likely little food. In the city, walking to the Cairo Museum, I saw a man, weighing less than 100 pounds, pulling himself along on the ground on his stomach, as thousands of other very poor people trudged along.

Our mission was to get the Egyptian government to clamp down on unauthorized videocassettes and music tapes, which were alleged to pose a serious threat to U.S. corporate interests. I also visited Egyptian universities that used unauthorized books in their courses, a threat to U.S. book publishers. The Egyptians officials we met with were wonderful: gentle, extremely hospitable, and quite willing to help to the limited extent they could, and those limits were severe. To begin with, there was no way the Egyptian public could afford to pay Western prices, and until the pricing was fitted to the public’s ability to pay, there would be unauthorized copying; this was also true of the universities: no one I met advocated taking without paying, but everyone wanted to educate the public.

The Egyptian government officials helpfully suggested that the U.S. companies enter into distribution deals with Egyptians; that way, when a dispute arose, the dispute would be perceived more as one between two Egyptian commercial interests. They also requested financial assistance and training for customs officials. Egypt turned the table too, by requesting assistance with stamping out authorized copying of Egyptian films in the U.S.: Egypt has long had the Middle East’s most vibrant film industry and its movies were widely watched, especially by Arabic speakers in the U.S.

Back home again, we reported our meetings to industry, and none of the Egyptian advice was taken, and as far as I know, nothing was done to help Egyptian filmmakers here, although I suggested using a back-door to the UCC through first publication in Lebanon for older films.

Yesterday, there were stories about proposed legislation by the Egyptian government to stop the copying in the West of famous Egyptian landmarks., like the Pyramids, the Sphinx, and Luxor. Zahi Hawass, the head of Egypt's Supreme Council of Antiquities, is quoted as saying:"The new law will completely prohibit the duplication of historic Egyptian monuments which the Supreme Council of Antiquities considers 100-percent copies … .If the law is passed then it will be applied in all countries of the world so that we can protect our interests… It is Egypt's right to be the only copyright owner for these monuments in order to benefit financially so we can restore, preserve and protect Egyptian monuments."

The proposal is said to not "forbid local or international artists from profiting from drawings and other reproductions of pharaonic and Egyptian monuments from all eras - as long as they don't make exact copies. ... Artists have the right to be inspired by everything that surrounds them, including monuments," he is reported to have said. Mr. Hawass is also quoted as opining that the Luxor Hotel in Las Vegas (currently the real Luxor is a love nest for French President Nicolas Sarkozy and Italian model Carla Bruni) is "not an exact copy of pharaonic monuments despite the fact it's in the shape of a pyramid. Others are reported to feel differently: the opposition newspaper Al-Wafd published an article Sunday calling for the hotel to pay a portion of it’s lodging and gambling profits to the city of Luxor. The newspaper wrote: "Thirty-five million tourists visit Las Vegas to see the reproduction of Luxor city while only six million visit the real Egyptian city of Luxor." Yet, Samir Farag, chair of Luxor town council acknowledged :"We can't forbid people from using the name of Luxor and copying monuments from (Luxor) city, which is the world's richest city for monuments," adding refreshingly, "tourists going to Las Vegas doesn't affect our city's business."

I don’t know how the distinctions thought of would be made, but if made, Egypt could lay claim to the longest copyright term in the world, by millennia. But to what end? How is that Mr. Hawass thinks that the law would be enforced in other countries for acts that occur in other countries? And what about Steve Martin’s famous King Tut dance and song routine, available here.

Monday, December 24, 2007

Back in the early 1980s, when the Reagan Administration initiated the use of trade leverage as a weapon to force Caribbean nations to revise their laws to fit U.S. content owners' bidding , no one dreamed a Caribbean nation would later turn the tables. Hats off to Antigua for doing so. A story in Saturday's NY Times (here) explains Antigua brought a WTO complaint over the U.S.'s refusal to permit online gambling originating from the island nation to be placed within the U.S., while permitting online betting on horses. The WTO ruled in Antigua's favor, awarding it the equivalent of $21 million in set-offs. Antigua has chosen to engage in unauthorized copying of U.S. films and music in that amount. One wonders whose figures Antigua will use to come to that amount: the IIPA's ludicrously inflated figures, where every estimated unauthorized copy represents a 1:1 displacement of a sale at U.S. prices, or something else of Antigua's own concoction? I am betting on the latter.

Courtesy of IPKat, here is the relevant section of the WTO award:

B. ANALYSIS BY THE ARBITRATOR5.6 In its request for authorization to suspend concessions or other obligations, Antigua identified certain obligations under the TRIPS Agreement, that it proposed to suspend. Specifically, Antigua indicated that it intends to take countermeasures in the form of suspension of concessions and obligations under the following sections of Part II of the TRIPS:Section 1: Copyright and related rightsSection 2: TrademarksSection 4: Industrial designsSection 5: PatentsSection 7: Protection of undisclosed information.5.7 As we have determined above, Antigua may seek to suspend obligations under the TRIPS Agreement. In order for such suspension to be equivalent to the level of nullification or impairment of benefits accruing to Antigua, it must not exceed US$21 million.5.8 It is incumbent on Antigua to ensure that, in applying such suspension, it does not exceed this level. Antigua has declined to provide any explanation on how it proposes to apply such suspension and how it will ensure that the level of the proposed suspension does not exceed the level to be authorized by the DSB. We regret that Antigua did not find it useful to provide such explanations.5.9 We note that our mandate does not allow us, in reviewing the equivalence of the proposed suspension with the level of nullification or impairment, to consider the "nature" of the obligations to be suspended. We understand this to mean that we may not question the complaining party's choice of specific obligations to be suspended (other than in the context of considering a claim that the principles and procedures of Article 22.3 have not been followed) and that we must assess the level of the proposed suspension, rather than its form, against the level of nullification or impairment.5.10 At the same time, it is important that the form that is chosen in order to enact the suspension is such as to ensure that equivalence can and will be respected in the application of the suspension, once authorized. The form should also be transparent, so as to allow an assessment of whether the level of suspension does not exceed the level of nullification. We also note that the suspension of obligations under the TRIPS Agreement may involve more complex means of implementation than, for example, the imposition of higher import duties on goods, and that the exact assessment of the value of the rights affected by the suspension is also likely to be more complex.5.11 In the light of these considerations, we note the remarks made by the arbitrators in EC – Bananas III (Ecuador), on the suspension of TRIPS obligations in that case. We consider these remarks to also be relevant to this case, in that the same considerations will be pertinent to the manner in which Antigua might implement a suspension of its obligations under the TRIPS Agreement.5.12 Like the arbitrators in EC – Hormones (US) (Article 22.6 – EC) , US – 1916 Act (EC) (Article 22.6 – US) , and US - Byrd Amendment (Article 22.6 - EC) , we also note that the United States may have recourse to the appropriate dispute settlement procedures in the event that it considers that the level of concessions or other obligations suspended by Antigua exceeds the level of nullification or impairment we have determined for purposes of the award.5.13 Finally, we note that Article 22.8 of the DSU provides that:"The suspension of concessions or other obligations shall be temporary and shall only be applied until such time as the measure found to be inconsistent with a covered agreement has been removed, or the Member that must implement recommendations or ruling provides a solution to the nullification or impairment of benefits, or a mutually satisfactory solution is reached. ..."VI. AWARD6.1 For the reasons set out above, the Arbitrator determines that the annual level of nullification or impairment of benefits accuing to Antigua in this case is US$21 million and that Antigua has followed the principles and procedures of Article 22.3 of the DSU in determining that it is not practicable or effective to suspend concessions or other obligations under the GATS and that the circumstances were serious enough. Accordingly, the Arbitrator determines that Antigua may request authorization from the DSB, to suspend the obligations under the TRIPS Agreement mentioned in paragraph 5.6 above, at a level not exceeding US$21 million annually.

OK, so other than well-known hipsters like Chief Judge Kozinski, court of appeals judges are not know for their slyness, much less a panel of them. But the Fifth Circuit has issued, per curiam, an opinion, that evidences a refined sense of the silly. The opinion in Armour v. Defendants (love the caption too!), 2007WL 4465192 (5th Cir. Dec. 21, 2007).

Here is the beginning:

PER CURIAM:

1. Armour's hook repeats twice and accompanies the following lyrics:

Let me know what you wan-na do, ba-by it's your call

Got-ta l'il bit a love for you, I can stop it or make it grow

Let me know what you wan-na do, ba-by it's your call

Got-ta l'il bit a love for you, I can stop it or make it grow

Beyonc's hook repeats four times and accompanies the following lyrics:

Ba-by boy you stay on my mind, ful-fill my fan-ta-sies

I think a-bout you all the time, I see you in my dreams

Ba-by boy not a day goes by, with-out my fan-ta-sies

I think a-bout you all the time, I see you in my dreams

The lyrics differ in word and substance: Armour's evince somewhat less love for her “ba-by”-“a l'il bit”-and somewhat more control over such love, which she can “stop” or “make grow;” Beyonc's suggest a deeper and more stubborn love, which pervades her thoughts, dreams, and “fan-ta-sies.” Yet, though the nature and depth of their loves may differ, Armour claims they find expression by way of the same musical melody.

The opinion then digresses into boring law-talk, albeit with the unusual paragraph form, with each paragraph consisting of about two sentences, or merely a cite. The case is a typical one of an unknown suing a well-known over similarities and access that doesn’t exist. There is one worthwhile passage on the attempted close relationship form of inferred access:

16. Although other circuits have presumed access on the basis of a “close relationship” between the third-party intermediary and the alleged infringer, Armour has not offered reasonably probative evidence to establish that Beyonce and T-Bone had a close relationship. See Towler, 76 F.3d at 583 (reasoning that a court may infer access if intermediary has a “close relationship” with infringer); Moore v. Columbia Pictures Indus., Inc., 972 F.2d 939, 944 (8th Cir.1992) (finding access where intermediary was “in a position to provide suggestions” to infringer). McKinney's affidavit proves only that McKinney personally believes Beyonce and T-Bone to be good friends and does not indicate any basis for that belief. Although credibility determinations at summary judgment are resolved in favor of the non-moving party, the full weight of McKinney's affidavit establishes at most that he honestly believes them to be good friends.

17. In her deposition, Beyonce admits that she knows of T-Bone but maintains that they are not friends and do not communicate with one another “at all.” Armour has presented no evidence to refute Beyonce’s claim.

Friday, December 21, 2007

In all the debates about file sharing it is sometimes assumed that people have a defined sense of what copyright is and are acting in violation of that definition; or, at least in violation of the שבע מצוות בני נח, the seven Noahide laws. To test these assumptions, in the summer of 2006, Karl Fogel of Chicago took a camera around and asked people a series of questions about copyright. The resulting (edited) 10 minute video may be seen here. It starts out a bit slow with the opening question, but then it picks up.

Mr. Fogel details his findings on his website:

In order to document the public perception of copyright today, we went around Chicago with a video camera over two days in the summer of 2006, asking strangers what they think copyright is for, how it got started, how they feel about filesharing, and for any other thoughts they have on copyright. We didn't tell the interviewees about this website or the nature of our project until after each interview was over.The points that show up consistently are:Most people felt that copyright is mainly about credit, that is, about preventing plagiarism.Everyone was on the artist's side — everyone wants to feel that they're treating the artists right. Over and over again, we heard the sentiment that when someone goes to a concert they'll buy the CD "to support the band", even if they already have all those songs on their computer already.Many people felt that copyright was about giving creators the means to make a living, but that in recent times it's been abused and corrupted by corporate interests.No one — not even the interviewee who had just read a book on copyright — knew where copyright comes from. Most people had the feeling it had been around for a while, though estimates varied widely on how long. One interviewee knew of the Constitutional clause that is the legal basis for copyright in the United States, but wasn't familiar with the history leading up to that clause.People were ambivalent about filesharing. They don't feel like it hurts anyone, except perhaps the music distributors, but they still feel some residual guilt about it anyway.One senses strong internal conflict here supporting the labels' assumption about filesharing: interviewees expressed a desire to be on artists' side, but rationalized file sharing because it is believed to only hurt the labels: hence the residual guilt. Whether file sharing in fact does result in systemic harm is, of course, contested as seen in the recent Canadian reports finding it doesn't.

Thursday, December 20, 2007

A district judge in Michigan denied the Romantic’s motion for a preliminary injunction against Activision, the makers of the popular game. I did a blog on the suit earlier (here). There is no written opinion yet, and apparently won’t be until next month, but here is a boiling down of what went down from “a source close to the case.”

The defendants argued that a band's sound is not protected under the "right of publicity" doctrine, and following the argument I made in my prior blog, that such a claim would, in any event, be preempted by 17 USC 114(b). This view is greatly strengthened by a statement from a band member that the band was complaining about copying of their sound from a particular recording. Defendants also argued that videogames are worthy of First Amendment protection (an argument the judge is reported to have been sympathetic to), and on the trademark count that the reference to the Romantics name was a non-infringing nominative use, adding that plaintiffs had not introduced evidence of any consumer confusion about sponsorship or endorsement, but rather argument that the recording in the game is of the band or a sound-alike.

It didn’t help matter that plaintiff’s counsel is reported by this source to have stated publicly that this was essentially "all about money." The Judge' is said to have been of the opinion that enjoining sales of Guitar Hero on the eve of the holiday would potentially be ruinous to the defendants. Interestingly, the judge precluded plaintiff’s efforts to introduce live testimony from at least 8 witnesses, ruling that the issues were legal, not factual. Here is a link to an article from the Detroit Free Press about the judge's ruling.

Tuesday, December 18, 2007

On August 30th, I did a posting about the potential joint liability of spouses in community property states, and noted that my very first published article on copyright (1981) was on the intersection of copyright and community property. On December 10, 2007, a federal court in Washington state issued an opinion in a community property dispute over copyright between spouses, Westmorland v. Westmorland, 2007 WL 4358309, that raises the question of when a case or controversy "arises under" the Copyright Act within the meaning of 28 USC 1338(a).

The posture of the case is unusual. Mr. Westmorland, a photographer, filed for divorce in the Washington State King County Superior Court. Both before and during the marriage, he had worked as a commercial photographer. In the course of the divorce proceeding, he asserted that (the still) Mrs. W. was seeking a distribution of the copyrights obtained by him before the marriage. My understanding of community property law is that property obtained before the marriage as well as monies received post-nuptial bliss from that property remain individual assets. In order to prevent the state court from actually awarding these non-community assets, Mr. W. filed suit in federal court seeking to enjoin Mrs. W. from seeking them in state court. The court granted the Mrs.’s motion to dismiss for lack of subject matter jurisdiction. According to the court, Mr. W.’s dispute did not arise under the Copyright Act.

Certainly, the state court could and should deny Mrs. W.’s request as a matter of state law, and in this regard, the fact that the pre-nuptial property is ownership of copyrights is no different than ownership of anything else. In dismissing Mr. W.’s case, the federal court engaged in a fairly standard plugging in of the facts to Judge Friendly’s T.B. Harms opinion, T.B. Harms Co. v. Eliscu, 339 F.2d 828 (2d Cir.1964). Judge Friendly, despite his massive intellect and specialized knowledge of federal jurisdiction, recognized that the Supreme Court had yet to settle on an intelligible approach to when a dispute may be said to arise under federal law. “Mindful of the hazards of formulation in this treacherous area,” he held for the court that an action “arises under” the Copyright Act:

if and only if the complaint is for a remedy expressly granted by the Act, e.g., a suit for infringement or for the statutory royalties for record reproduction …, or asserts a claim requiring construction of the Act, as in De Sylva v. Ballentine, 351 U.S. 570, 76 S. Ct. 974, 100 L. Ed. 1415 (1956)], or, at the very least and perhaps more doubtfully, presents a case where a distinctive policy of the Act requires that federal principles control the disposition of the claim. The general interest that copyrights, like all other forms of property, should be enjoyed by their true owner is not enough to meet this last test.

It cannot be said, regrettably, that Judge Friendly was any more successful than the Supreme Court in this “treacherous area.” For example, by using “remedy,” T.B. Harms invites attention away from whether the claim is one for a right created by the Copyright Act and toward nondispositive issues such as remedial measures for violation of the right. Is a claim that requests an injunction a copyright claim merely because an injunction is sought? The answer is no. Injunctive relief may be, and often is demanded with declaratory relief under state law. Is a claim that seeks an accounting of the defendants' profits a copyright claim? The answer here, too, is no, since disgorgement of ill-gotten gains is common in many state law actions, such as unfair competition. Is a claim that seeks statutory damages under § 504(c) a copyright claim merely because, in the prayer for relief, that measure of damages is sought? Here, statutory damages are an uncommon remedy, and certainly when asked for in the amounts provided by § 504(c), unique to that section, but a state cause of action is not transformed into a federal cause of action merely by requesting statutory damages.

Either the cause of action on the merits is one arising under the Copyright Act or it is not. If it is not, asking for monetary damages found uniquely under the Act does not change the elements of the cause of action. The correct approach is to determine whether the plaintiff's complaint actually pleads the elements required for an infringement action—if so, one would expect the prayer for relief to request infringement, rather than contract remedies, but it is the cause of action that determines whether jurisdiction exists. However, one reads numerous opinions in copyright cases, citing T.B. Harms, finding subject-matter jurisdiction based on the damages sought.

In the Westmorland case, the court noted that Mr. W did not seek a remedy provided under the Copyright Act, or interpretation of a provision of the Act, but he did argue that the preemption of such a state award was an important federal policy. The court answered this in a manner it thought clear, but I don’t: “preemption is not a policy promoted by the Copyright Act. Although Congress invoked that principle in order to implement the policies behind the Copyright Act, … preemption itself is not the policy.” Huh? I thought the argument was that the award of copyrights that had no basis in state law conflicted with federal law, or at least, that is the argument I would have made.

In the end, there seems another basis for dismissing the case, justiciability: the state court had not awarded anything yet, and might well get the issue correct. Moreover, the issue did not appear to raise any issues unique to federal law: the state court could award at least half of the proceeds from copyrighted works created and exploited during the marriage; and may be able to award co-ownership of them (although not co-authorship). The fact that it cannot do so for works created before the marriage has nothing to do with their status as copyrighted works, but rather with principles of community property law applicable to all forms of property.

Monday, December 17, 2007

The First Circuit has struggled for years with a case involving the well-known Hummel figurines, drawings of which were created by Sister Berta Hummel in Germany in 1931. The most recent decision hopefully will put an end to what in my opinion has been meritless litigation pursued in one form or another for 40 years by a lawyer who went from representing one party to becoming a party himself, Cambridge Literary Properties, Ltd. v.W. GoebelPorzellanfabrik G.m.b.H & Co., KG, 2007 WL 4340860 (1s Cir. Dec. 13, 2007). The most recent decision raises important questions about the intersection of federal /state jurisdiction, state law actions for an accounting between co-authors, and the Copyright Act’s statute of limitations. The existence of a 10 page impassioned dissent describing the majority’s approach as “unprecedented and potentially pernicious” gives some flavor to the case.

The history and facts are complicated, so I have tried to distill them to their essence for our purposes. Sister Hummel and her convent conveyed rights to publish her drawings in a book (“DasHummel-Buch”). The book had a preface and poems by a Margarete Seeman. The book was registered in the U.S. Copyright Office as a work for hire. Defendant Goebel through an assignment from the book publisher came to own rights in the book. Goebel also obtained rights directly from Sister Hummel and the convent for the right to make figurines of the drawings. Goebel assigned the right to distribute the figurines in the U.S. to Schmid Brothers. Goebel and Schmid had a fractious relationship, which led to litigation in which Schmid was represented by attorney Henry Hermann. The parties eventually settled by splitting 50-50 the renewal interest. Schmid went bankrupt, and Goebel bought the 50% it didn’t own.

One would think that would be the end of the matter, but Hermann had other ideas, even though he got $3,750,000 as a creditor in the Schmid bankruptcy for his fees. Hermann decided he could concoct a claim based on Seeman’s contribution to the book and formed plaintiff company to pursue his theory. He tracked down her heirs in Europe and got and assignment According to the court, he is the only employee of the company. Plaintiff sued Goebel not for copyright infringement, but for an accounting for profits, asserting diversity jurisdiction. The district court granted defendant’s motion for summary judgment; the summary judgment motion asserted that the Copyright Act’s three-year statute of limitations barred the state law action.

At this point, some readers may say, huh? How can a statute of limitations for copyright infringement bar a state law claim for an accounting of profits between co-authors brought under diversity jurisdiction? The answer according to the majority is that the accounting cause of action was predicated on there being co-authorship status; if there can be no such co-authorship claim because the statute of limitations bars even a facial assertion of co-authorship status, there can be no possible accounting cause of action. The majority found the copyright limitations indeed barred the co-authorship claim, and hence affirmed dismissal of the claim.

The dissent cried foul, accusing the majority of using federal law to trample on state law. That’s a little hard to accept under the facts of the case and with jurisdiction being based on diversity jurisdiction: the court of appeals was merely attempting to apply the law as it thought a state court would, and it thought a state court judge would also reach the predicate of whether there could be a facial claim to co-authorship. At this point, the dissent launched into a dissertation on whether the presence of a substantial federal question is sufficient to convey federal jurisdiction when plaintiff itself carefully avoids the invocation of a federal question in its well-pleaded complaint. The question to me is not one of preemption or even federal-state jurisdiction, but instead whether under the facts of this case, a plaintiff who had been involved for 40 years in attempting to seek a piece of the piece should be permitted to proceed with a state claim whose very viability was predicated on a federal right that it did not possess. I think the majority came to the right conclusion, although the issue is messy to the say the least.

Friday, December 14, 2007

Publication used to be a critical concept in copyright. Until the 1976 Act, it served as the dividing line between state law protection (for unpublished works) and federal protection (limited to published works generally; cf. Section 12 of the 1909 Act, permitting registration for unpublished works copies of which weren’t sold). The courts, ever inventive, developed rules for this rubicon, in particular “investitive publication,” meaning a publication with a proper notice that resulted in the obtaining of federal rights, and “divestitive publication,” meaning a publication without a proper notice and which resulted in the loss of state law protection but without being able to ever get federal protection; in other words, the work was in the public domain. One might think that the two concepts would be applied identically, but that would be asking for legal consistency, something Learned Hand warned against: in order to avoid tossing works into the public domain for minor straying off the path of formality adherence, the courts usually required that the publication be a bit more of a publication to lose protection than to get it. Much like the equal protection clause protection created by the Supreme Court in Bush v. Gore, publication was very much in the eye of the beholder and for that case alone.

If publication itself was hard to figure out, how about “simultaneous” publication? Simultaneous publication was a device originally used by U.S. publishers as a “Back door to Berne;” a few copies were “published” in Canada or the UK shortly after or on the same day as the real publication took place in the U.S. Then, the publisher would claim the work was subject to Berne protection long before the U.S. adhered to Berne. Canadians in particular thought this not sporting and attempted to put an end to it. Berne itself deals with the issue of publication and simultaneous publication in Article (3)-(4):

(3) The expression "published works" means works published with the consent of their authors, whatever may be the means of manufacture of the copies, provided that the availability of such copies has been such as to satisfy the reasonable requirements of the public, having regard to the nature of the work. The performance of a dramatic, dramatico-musical, cinematographic or musical work, the public recitation of a literary work, the communication by wire or the broadcasting of literary or artistic works, the exhibition of a work of art and the construction of a work of architecture shall not constitute publication.

(4) A work shall be considered as having been published simultaneously in several countries if it has been published in two or more countries within thirty days of its first publication.

After we joined Berne, we “two-tiered” the Section 411(a) requirement of registration as a prerequisite to bringing an infringement action, meaning we left the requirement in for U.S. works, but abandoned it for works of Berne origin (a category later expanded to almost all foreign works). This necessitated defining what is a foreign work, a task that also involved the tricky question of simultaneous publication. The answer is found in the definition of “United States work” in Section 101:

For purposes of section 411, a work is a “United States work” only if —

(1) in the case of a published work, the work is first published —

(A) in the United States;

(B) simultaneously in the United States and another treaty party or parties, whose law grants a term of copyright protection that is the same as or longer than the term provided in the United States;

(C) simultaneously in the United States and a foreign nation that is not a treaty party.

That wasn’t the end of simultaneous publication, though. The U.S. turned the tables on efforts by Canada and the UK to close the Backdoor to Berne in the 1994 GATT restoration act, by excluding from restoration works from those countries (although not by name) if they were simultaneously published in the U.S., using the 30 day period as the period for simultaneous publication, referred to in Article 3(4) of the Berne convention, quoted above. Thus in the definition of restored work in Section 104A(h)(6)(D) we find:

(6) The term “restored work” means an original work of authorship that — ;…(D) has at least one author or rightholder who was, at the time the work was created, a national or domiciliary of an eligible country, and if published, was first published in an eligible country and not published in the United States during the 30-day period following publication in such eligible country ….

The Ninth Circuit has issued a decision on this issue. Here is the opinion, editing out extraneous stuff:

Plaintiff Estate of Gunter S. Elkan sued Defendants Hasbro, Inc., and its wholly owned subsidiary Milton Bradley Company for copyright infringement of Plaintiff's board game "Strategy," allegedly caused by Defendants' board game "Stratego." The district court granted Defendants' motion for summary judgment, ruling that Defendants lacked access to Plaintiff's work. Defendants moved for the award of attorney fees, which the district court denied. Plaintiff appeals the grant of summary judgment, and Defendants cross-appeal the denial of attorney fees.…

1. Under the Copyright Act, "[t]he legal ... owner of an exclusive right under a copyright is entitled ... to institute an action for any infringement of that particular right committed while he or she is the owner of it." 17 U.S.C. § 501(b). Plaintiff does not dispute that its United States copyright for Strategy expired in 1976, at which time Strategy passed into the public domain. See Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 33-34 (2003). Plaintiff argues that its Canadian copyright for Strategy provides independent protection under the Copyright Act and restores the United States copyright under 17 U.S.C. § 104A. We disagree.

Although "[b]oth the Universal Copyright Convention ... and the Berne Convention for the Protection of Literary and Artistic Works ... mandate a policy of national treatment in which copyright holders are afforded the same protection in foreign nations that those nations provide their own authors," Creative Tech., Ltd. v. AztechSys. PTE, Ltd., 61 F.3d 696, 700 (9th Cir.1995), "[a]ny rights in a work eligible for protection under [the Copyright Act] ... shall not be expanded or reduced by virtue of, or in reliance upon, the provisions of the Berne Convention, or the adherence of the United States thereto," 17 U.S.C. § 104(c) (emphasis added). The rights to Strategy not only were eligible for protection under the Copyright Act, they were protected when Plaintiff obtained a United States copyright. Consequently, the Canadian copyright cannot expand the rights to Strategy here in the United States beyond those provided by the United States copyright , which Plaintiff admits expired but alleges has been restored.

In order for a foreign copyright to restore an expired United States copyright, a published work must have been published first in the foreign country and "not published in the United States during the 30-day period following publication in such eligible country. " Id. § 104A(h)(6)(D) (emphasis added). The Canadian copyright and United States copyright each lists the initial publication date for Strategy in its respective country as May 25, 1948. Those publication dates preclude restoration of the United States copyright under § 104A(h)(6). Plaintiff does not have a valid, enforceable copyright under the Copyright Act.

Thursday, December 13, 2007

On the day when the House IP subcommittee is holding a hearing on H.R. 4279, a bill that may be the most outrageously gluttonous IP bill ever introduced in the U.S., it is fitting to pay tribute to an incisive look at how we have come to the point where such an initiative could be dreamed up even in the porcine corridors of K Street. Greed of course is the short and complete answer, but those of a more historical and analytical turn of mind will want to study carefully Professor Neil Netanel’s 33-page “Why Has Copyright Expanded? Analysis and Critique.” The article is to be published in 6 Directions in Copyright Law (Fiona Macmillan ed., Edward Elgar pub. 2008), but it is available for free here via ssrn. The article was planned as part of a longer, forthcoming book, solely authored by Professor Netanel, “Copyright’s Paradox” due out in March/April 2008, but was spun off. I have pre-ordered my copy of “Copyright’s Paradox” on amazon.com, and I strongly urge everyone else to as well: here’s the link.

In “Why Has Copyright Expanded?” Professor Netanel has answered the question posed by some who commented on my posting on H.R. 4279: how is it that the scope of copyright has become so obviously and seriously in conflict with the public interest, and that the problem is getting worse, not better? A foundational answer is that corporate content owners are very effectively at lobbying and that their interests are in maximizing profits, not serving the public interest. Professor Netanel states:

[M]y point is not that the motion picture and recording studios are evil actors. it is simply that their interest is not necessarily the public interest. The copyright industries naturally wish to obtain all-encompassing a copyright protection as as possible for their extensive inventories of content. And they naturally wish to use that protection to ward off competition from new media entrepreneurs thatthreaten their traditional ways of doing business. But the public interest – as reflected in some 300 years of copyright precedent – is for a narrowly tailoredincentive for authors to contribute to the store of knowledge and enrich the publicdomain. Copyright is meant to spur creativity and expressive diversity. When it has the opposite effect – when authors cannot freely build upon their predecessors’ works in creating new expression and when copyright serves as atool for enriching media conglomerates – something has gone awry.And things have gone very awry. Maximizing profits and eliminating all threats to existing business models are, however, not appealing public positions to take, although one does on occasion hear pure expressions of it, as when CEOs talk about their a duty being to shareholders, and when the hired help is treated like hired help, as witnessed in the current writers’ strikes; the short-lived effort to have sound recordings statutorily enumerated as a category of work for hire; and in the 1998 term extension, when composers were told that if they didn’t agree to have the extra 20 years go to music publishers directly rather than to those who actually created the works, there would be no extension at all: some crumbs are better than none.

It is and has long been an open secret that the paeans to authors paid by those who buy rights are phony; this has been the case since 1709, when book publishers, rebuffed in their efforts to extend monopolistic licensing laws benefiting solely themselves, put authors out in front as lobbying puppets.; and this was in a period of time when authors received a one-time, small payment for all rights: royalties payments were in the future.

Current rhetorical strategies are hardly any different. Jack Valenti’s clothes may have been more colorful than his 17th century Grub Street predecessors, but his language and rhetorical purpose were not. Sometimes the language is uncannily the same, as when Mr. Valenti testified in 2002 that “We don’t want to shut down innovation. We just want to protect private property from being pillaged.” But of course he and other content owners very much want to shut down innovation; it is the creative destructive force of innovation articulated most famously by Joseph Schumpeter that shakes content owners’ in their boots and that Mr. Valenti has so famously opposed every step of the way, from cable television in the 1970s, to the VCR in the early 1980s, and to the Internet. Digital tape, Mp3.com and the iPod were the record industries analogs. But such raw efforts to control business models (like shoving whole CDs down our throats) dare not publicly speak their name, so it is necessary to use a beard, and no beard is more effective than property.

The importance of metaphorically characterizing copyright as a property right has been known for well over a century and was pointed out in 1898 by that wonderful Victorian man of letters and member of Parliament, Augustine Birrell, in a series of lectures he gave as Quain Professor of Law at University College, London. Mr. Birrell wrote:

[T]he Western World has throughout its long history shown an ever increasing disposition to recognise the right of individuals to the exclusive possession of certain things, and these rights it has clustered together, recognised, venerated, worshipped, under the word property. To be allowed to enter this sacrosanct circle is a great thing. None but the oldest families need apply … Once inside this circle your rights were supposed in some romantic way to be outside the chill region of positive law—they were based upon natural rights, existing previously to the social contract, and without which Society was deemed impossible.Neither were these romantic conceptions mere jeux d'esprit. Consequences flowed from them. If your right to turn your neighbor off your premises, to keep your things to yourself—was property, and therefore ex hypothesi founded on natural justice, he who sought to interfere with your complete dominion was a thief or a trespasser… . Professor Netanel reviews some of these invocations of property in the maximalist campaigns, but I go further. The description of someone as a thief or trespasser is, I assert the flip side of the initial classification of copyright as property. The appellation thief or trespasser is meaningless without an owner of property: in Mr. Defoe’s famous novel, did the cannibals care a hoot about Robinson Crusoe’s fenced-in habitation and cave? Hardly, to them he was food and if they had eaten him they would not have taken over his abode; nor would it prevented Crusoe from becoming an entrée if he had proclaimed a fee simple absolute over his living quarters and refused entry to the cannibals as trespassers. What good is it, after all, to say you own property if there are no thieves or trespassers to do battle with? This is where moral panics and folk devils are pressed into service as the vehicle for obtaining ever-greater rights.

The concept of Moral Panics got its name from British sociologist Stanley Cohen’s 1972 book “Folk Devils and Moral Panics.” Professor Cohen studied the reaction to the Mods and Rockers phenomenon of the 1960s. Moral panics are essential to the theory of copyright-as- property for the most pragmatic of reasons: it is hard to enact indefensible legislation granting powerful rights unless you can convince legislators that folk devils pose an existential threat. In the United States, the most colorful expositor of moral panics and folk devils was the late Jack Valenti. (Lest one mistakenly think I am attacking Mr. Valenti personally, please see my praise of him here).

Throughout his career as the MPAA’s chief lobbyist, Mr. Valenti skillfully and successfully employed moral panics and folk devils before Congress in an effort to gain increased copyright protection. As metaphors, Mr. Valenti’s moral panics provided the means by which busy and sympathetic members of Congress could appear to be engaged in sober reasoning. Moral panics in copyright are the result of a carefully constructed political strategy for obtaining political benefits. They are not hyperbole; they are the core of a careful strategic plan to alter the copyright landscape, and they have worked extremely well.

The other element of this plan, which Professor Netanel very carefully lays out is how copyright became a trade issue, a jobs issues. This plan has onvolved a complicated dance involving the copyright industries, the Executive Branch/USTR, WIPO, and Congress. Copyright industries were allegedly a powerful engine of the economy and as such need ever greater rights to wield against the folk devils pirates and thieves; all the better of course that these folk devils can be located overseas since foreigners are much easier demonized.

It is not possible to justice to the beauty of Professor Natenel’s work even in as bloated a blog as this. The only answer is to read the article yourself, and as soon as possible.

Tuesday, December 11, 2007

The UK’s IPKat blog is one of the most informative and amusing IP blogs in the world. Hands down it has the best pictures. Yesterday’s postings were no exception, starting with this lead:

Quiscustodescustodiet?

This is too good to save till Friday, says the IPKat, who thanks fellow blogger Peter Groves for sending it to him. Designer Hannah McHalick is suing the Kent Police for allegedly copying a slogan from her baby clothes range for an online shop. The police are apparently selling baby clothes bearing the slogan "I've Been Inside For Nine Months".

Ms McHalick says the slogan is a rip-off from her product range, which includes black-and-white convict-style baby grows, bibs, T-shirts and hoodies with the slogan "Been inside for nine months". The police deny infringement, maintaining that their product range is different because they have added the word "I've" before Ms McHalick's slogan.

The IPKat is most amused. He doubts whether the words "Been inside for nine months" are an original literary work in their own right. He also fails to see how, if that slogan were an original literary work, the addition of the word "I've" would make any difference to the question of unlawful reproduction -- which all goes to show that the criminal enforcement agencies could probably do with a refresher course on their IP law. Merpel says, let's say it's a trade mark matter: the slogan would either be descriptive (for babies that go to their full term) or deceptive (for those born early) -- and would the relevant consumers regard the slogan as an indication of the origin of the goods? But there's always passing off.

The result in the U.S. under copyright would be the same: Copyright Office regulations and a large number of court decisions establish that there is no copyright in names, words, or short phrases. As for the Kent police matter, you absolutely must go the site to see the pictures which are worth a few thousand words (are you listening Sweet & Maxwell?); here’s the link, which hopefully will be bookmarked:

Monday, December 10, 2007

On December 4th of this year, the legendary UK intellectual property authority Sir Hugh Laddie gave his inaugural lecture as a Professor at the University College London. The title of his lecture was “The Insatiable Appetite for Intellectual Property Rights.” Professor Laddie spoke of his great concern for the ever-strengthening of intellectual property rights. Professor Laddie has had an illustrious career as a top private practitioner, a celebrated judge of the Patent and Chancery courts, and now as a chaired professor. He is also the co-author of the leading UK treatise. He is hardly an anti-IP sort. Neither am I. I have spent 25 years as a copyright lawyer, 12 of them in private practice, the first 6 of which involved representing trade associations of content owners and individual content owners, as well as 4 and a half years in the Copyright Office, an agency that is also hardly anti-copyright. Before 2007, I spent much of the previous 7 years researching, writing, and typing a 7 volume, 6,000 page treatise on copyright, an amount of time one spends only on things that are very meaningful to you.

Regrettably, both Sir Hugh and I have been lead in recent years to speak out in protest over the unslakable lust for more and more rights, longer terms of protection, draconian criminal provisions, and civil damages that bear no resemblance to the damages suffered. As Sir Hugh noted in his speech, “A calm look at the way IP rights are obtained and enforced in practice suggests that something is wrong. The drive for more IP rights has produced startling results.” He then gives page after page of examples, drawn from copyright law, trademark law, and patent law, concluding:

Where IP rights perform their function of advancing the sciences or arts, they should be encouraged to do so. Where or to the extent that they do not, they have no justification and the normal discipline of competition should prevail. The gluttony which has resulted in the growth of completely unnecessary or excessively long IP rights undermines the system itself. As Shakespeare wrote in Richard II,– “With eager feeding food doth choke the feeder.”I say Amen. The question is not whether copyright is a good thing: properly calibrated copyright is very good, indeed essential for certain classes of works. Sir Hugh and I are both pro-IP in this most important of senses. But an excessive amount of something that is beneficial in measured doses can become fatal in overdoses, and copyright is already at fatal strength. Yet, when they are not alienating their customers, copyright industries spend the rest of their time in efforts to obtain new, powerful, undeserved, and unnecessary remedies. Content owners act as if obtaining more and more and more will save them: it won’t, quite the reverse: it only continues an unfortunate trend of making copyright law and content owners among the most despised elements in society. While proponents of such efforts describe themselves as being pro-IP, they have the opposite effect by bringing disrespect on the entire system. I call that being anti-IP, not pro-IP.

One example of this is presented by H.R. 4279, introduced last week, and available here. There is a hearing this Thursday. The bill’s title is designed to constitute the acronym “Pro-IP,” but it will have the opposite effect, because although the bill is touted as dealing with counterfeiting and piracy, even scratching the surface of the bill reveals a grab bag of previous proposals whose origins are the suits brought by the music industry against Mp3.com in 2000, and not Nigerians selling illegitimate Prada bags in Times Square. Let’s go through two of the bill’s provisions, beginning with section 104.

SEC. 104. COMPUTATION OF STATUTORY DAMAGES IN COPYRIGHT CASES. Section 504(c)(1) of title 17, United States Code, is amended by striking the second sentence and inserting the following: `A copyright owner is entitled to recover statutory damages for each copyrighted work sued upon that is found to be infringed. The court may make either one or multiple awards of statutory damages with respect to infringement of a compilation, or of works that were lawfully included in a compilation, or a derivative work and any preexisting works upon which it is based. In making a decision on the awarding of such damages, the court may consider any facts it finds relevant relating to the infringed works and the infringing conduct, including whether the infringed works are distinct works having independent economic value.'.

This provision is one of the most gluttonous in the whole bill. It seeks to expand radically the amount of statutory damages that can be recovered, and in cases where there are zero actual damages. The provision is intended to benefit the record industry but will have terrible consequences for many others; the provision has nothing to do with piracy and counterfeiting; instead it seeks to undo rulings in the 2000 MP3.com litigation, a decidedly non-piracy or counterfeiting case, instead involving the use of digital storage lockers. Under the original MP3.com decision, where a CD had twelve tracks, there was only one award of statutory damages possible. Under the bill, there may be 25: there would be 12 for each track on the sound recording, 1 for the sound recording as a whole, and 12 for each musical composition. Under this approach, for one CD the minimum award for non-innocent infringement must be $18,750, for a CD that sells in some stores at an inflated price of $18.99 and may be had for much less from amazon.com or iTunes. The maximum amount of $150,000 then becomes three million, seven hundred and fifty thousand dollars per CD. Now multiple that times a mere ten albums, and one gets a glimpse at the staggering amount that will be routinely sought, not just in suits filed, but more importantly in thousands for cease and desist letters, where grandmothers and parents are shaken down for the acts of their wayward offspring. These private non-negotiable demands don’t see the light of day, but they have resulted in “settlements” wherein ordinary people have paid abnormal amounts of money rather than be hauled into court and thereby incur costs that will bankrupt them. One only wishes Congress would hold a hearing on this practice.

Even limiting claims to 12 tracks, this equals a minimum award of $9,000 per CD. Is there any doubt that $9,000 per CD will be demanded and described as a metzia sparing parents and grandparents from the far greater expenses of litigation? It is no answer to say, well, we are only talking about those involved in file sharing, they're bad people who deserve to pay; when was proportionality abandoned as a principle of law? During a death penalty argument in 1981, Justice Rehnquist suggested that the inmate's repeated appeals had cost the taxpayers too much money. Justice Marshall interrupted, saying, "It would have been cheaper to shoot him right after he was arrested, wouldn't it?" Imposing the death penalty on a few file sharers might discourage others, but that hardly forms the basis for sound policy, nor do statutory damage penalties that will result in economic death.

On top of this, there is absolutely zero evidence that the current system, which already provides extraordinarily high awards way out of proportion to actual damages, is inadequate. Under the current system, even assuming the lowest amount available for sharing an entire CD, the minimum recovery is $750 per work; in the Minnesota case, the jury awarded $9,250 per work. On what basis then is there a need for even greater damages? None.

The bill runs counter to one of the great successes of the 1976 Act, its clearing up the mess on statutory damages under the 1909 Act. Because it is unlikely many know this history, I will spell it out. Section 101(b) of the 1909 Act was one of the many failures of that Act. In addition to confusion over whether statutory damages were awardable under section 101(b) only when actual damages or defendant's profits were unascertainable, section 101(b) presented a baffling smorgasbord of provisions, the full effect of which can be grasped only by reading the provision. There were provisions that provided minima and maxima as well as provisions that set awards on a per copy basis, e.g., 100,000 infringing copies at $1.00 a copy, equaled a $100,000 award.

It is difficult to tell from the face of the section how it worked, and many doubts persisted until its repeal on January 1, 1978. From a bird's-eye view, there was a basic range of $250 to $5,000. Within that range, the court had discretion to award an amount considered “just,” but in all cases an award of at least $250 was required. Beyond this, the Copyright Office took the position that section 101(b) operated as follows in conjunction with actual damages or profits: if actual damages or profits were less than $250, the court was required to award at least $250, but could award a higher sum up to $5,000. If actual damages or profits were established in some amount between $250 and $5,000, the court could award either the established amount of those damages or any higher amount up to $5,000. If actual damages or profits were established in excess of $5,000, the court had to award that amount and could not award statutory damages, except where the infringement was willful, in which case there was no limit on the amount of statutory damages that could be awarded. There were also a number of special statutory damages provisions: motion picture companies that innocently infringed a dramatic work were liable only for a single award in an amount between $250 and $5,000. In other cases, specified amounts were set and calculated by the number of infringements, not by the number of works infringed, at least theoretically. For example, in Law v. NBC, a musical composition was broadcast by NBC in a chain hookup to 67, 66, and 85 stations, equaling 218 stations, and, according to the court, 218 infringements. In Burndy Engineering Co. v. Sheldon Service Corp., a catalog that infringed three copyrights was published in two separate editions, the second of which had three printings. The number of infringements was deemed to be 12: (a) 3 × 1 (the first edition), + (b) 3 × 3 (all three printings of the second edition). The four categories at the end of section 101(b) for specified subject matter could also lead to high awards, e.g., 100,000 copies of an infringing painting times $10 per copy. Numbers set forth in the statute were not set in stone, though; they were subject to the court's discretion, thus resulting in tremendous uncertainty in determining one's possible recovery (or exposure in the case of defendants).

It is not surprising, then, that in his 1961 recommendations to Congress for a new Act, the Register of Copyrights concluded that the schedule of statutory damage awards in section 101(b) “has not proved to be a very useful guide, because the amounts are arbitrary and the number of copies or performances is only one of many factors to be considered in assessing damages. In most cases the courts have not applied the mathematical formula of the schedule, and in a few cases where this has been done the results are questionable.” The Register also expressed concern about the operation of section 101(b) on innocent infringers, over multiple infringements, and over awards against defendants who infringed after receiving notice from the copyright owner. The Register not surprisingly called for a thorough overhaul of statutory damages with these two recommendations:

(1) Where an award of actual damages or profits would be less than $250, the court shall award instead, as statutory damages for all infringements for which the defendant is liable, a sum of not less than $250 nor more than $10,000, as it deems just. However, if the defendant proves that he did not know and had no reason to suspect that he was infringing, the court may, in its discretion, withhold statutory damages or award less than $250.(2) Where an award of actual damages or profits would exceed $250 but would be less than the court deems just, the court in its discretion may award instead, as statutory damages for all infringements for which the defendant is liable, any higher sum not exceeding $10,000.

Two recommendations in the 1961 Report excited, negatively, the copyright bar: the innocent infringer reduction, and the limitation of one award for all infringements for which the defendant was liable. This limitation meant that if defendant infringed 200 works, there was only one award; or, if defendant infringed three works by different acts for each work (reproduction, distribution, and performance), there was still one award. As a result of comments on the report by the copyright bar, in 1963 the Register circulated a draft omnibus bill. Section 38 of this bill covered damages. The subsection on statutory damages took a new, two-tier approach based on whether registration had been made before the infringement occurred. The first tier covered works infringed after registration. In this circumstance, the copyright owner would receive the larger of actual damages/profits or statutory damages of not less than $250 or more than $10,000 “for all infringements of a single work for which the infringer is liable.” A single work was defined as “including all of the material appearing in any one edition or volume or version of a work used by the infringer. The 1963 preliminary draft bill thus softened (but did not eliminate) the 1961 report's recommendation on how to deal with the specter of multiple awards against the same defendant. The 1961 report had gone too far in favoring the defendant. Under that report's recommendation, a defendant had every incentive to infringe as many works as possible since there would be only one award for “all infringements for which the defendant is liable.” The 1963 preliminary draft bill, by contrast, permitted separate awards for each “single work” infringed, but defined a “single work” so that a defendant who infringed, say an anthology of 500 poems, would be liable for only one award. Different copyright owners whose works were infringed in a “single work” would have to share the single award. This concept was included, in a revised form, in section 504(c) as enacted.

In discussions on the draft at the Copyright Office with members of the copyright bar and industries, the issue of the single-work limitation was raised. In a revealing explanation of how the limitation would work in practice, Copyright Office General Counsel Abe Goldman addressed the concern expressed by an in-house counsel at ABC that if a plaintiff alleged a motion picture infringed five different versions of a work, five awards would be required, even though the material copied was found in all five works. The position of the Copyright Office was as follows:

GOLDMAN. Won't you find all of this material in one version? Did the infringer pick some from this version and some from that version? OLSSON. I write the poem, and then I revise it somewhat, and I do this five times. This is done with motion pictures occasionally, where you find the same stock footage, let's say, in five different pictures. Each one is copyrighted. What was infringed by the infringer is the stock footage. The plaintiff comes in and says, “Ah, you owe me $1,250 [$250 × 5] as a minimum under th[e] statute.”GOLDMAN. But under this definition you could point to one film and say that everything you copied is in this one film.OLSSON. But wouldn't the plaintiff dispute that, Abe? He might say, “No, in my belief you copied them all. You took something from each copyright.” A “single work” is work A, and another “single work” is Work B …GOLDMAN. I think this definition says, Harry, that if the infringer can show that everything he copied was all in one film, that constitutes an infringement of a single work.OLSSON. I see. The other works would not be infringed in your view, Abe?GOLDMAN. That is my understanding of what this definition would mean in that case.

The first revision bills were introduced in Congress in 1964. Section 38 of these bills provided, with respect to statutory damages:

Instead of actual damages and profits, the copyright owner is entitled, at his election, to an award of statutory damages for all infringements of any one work for which the infringer is liable, in a sum of not less than $250 or more than $10,000 as the court considers just. In a case where the copyright owner proves that infringement was committed willfully after service upon the infringer of a written notice to desist, the court in its discretion may award statutory damages of more than $10,000. For purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

Section 38 differs in a number of respects from the Copyright Office's 1963 draft. From the top to the bottom, the first change is that the copyright owner was given the sole option of determining whether to elect actual damages/profits or statutory damages. As a result, the bills eliminated the necessity of calculating which form of recovery was greater. The bills did not define, however, when the election was to be made, an oversight corrected in 1966. While the 1964 version continued the 1963 limitation of a single award to “all the infringements of one work for which the infringer is liable” (albeit with a change from a “single work” to “one work”), the 1963 version's definition of “single work” as “all of the material appearing in any one edition or volume or version of a work used by the infringer” was changed to read “all the parts of a compilation or derivative work constitute one work.” Additionally, the Copyright Office dropped the provision permitting the court to reduce or eliminate entirely statutory damage awards for innocent infringers, while at the same time including a new provision increasing, without a ceiling, the amount awardable for willful infringement, but only after defendant received service of actual notice of infringement. This last provision was a throwback to the 1909 Act.

In meetings with the Copyright Office on the bill, the issue of awards for multiple infringements proved problematic. In particular, it was inquired of the Copyright Office whether its intent was to “cover several infringers in several media, or … might [the provision] be limited to infringements of only a particular right and that there might then be the question of overlapping exclusive rights.” The Copyright Office's General Counsel responded as follows:

GOLDMAN. With respect to more than one infringer being involved, the language of the clause … says “ … all infringements of any one work for which the infringer is liable …” The assumption there was that you were dealing with one infringer. If you have two separate infringers who commit separate infringements, presumably you can sue two people separately and collect from each.The thought here was to avoid the award by a court of a tremendous amount of multiplying $250 times some supposed number of infringements by one person. In the case, for example, where you have a motion picture that is shown in a thousand movie houses, is the producer to be liable for $250 times a thousand if the motion picture contains infringing material?With respect to a series of infringements, if you bring suit today for infringements that have occurred before today, you certainly don't foreclose your claim for damages for infringements that are going to occur in the future, but you do recover for all the infringements for which the defendant is liable up to today. If you have more than one work involved, I think the answer is also spelled out here. It says, “infringements of any one work” and you will find at the end of that section a sentence which relates to the “one work” reference: “For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.” This means, for example, that if somebody infringes by taking ten different cuts out of an advertising catalog, he's committed one infringement and not ten. This question has come up, as I think you know, in a number of cases.”With the expiration of the 88th Congress and no action on a revision bill, new bills were introduced in the first session of the 89th Congress. Accompanying those bills was the promised supplementary report by the Register of Copyrights explaining the 1965 bills (and reproducing them). The 1965 bills (in addition to renumbering the section to its present 504(c)) read in relevant part:

(1) Except as provided in clause (2) of this subsection, the copyright owner may elect to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $200 or more than $10,000 as to the court appears just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.(2) In a case where the copyright owner sustains the burden of proving that infringement was committed willfully after service upon the infringer of a written notice to desist, the court in its discretion may increase the award of statutory damages to a sum of not more than $20,000. In a case where the infringer sustains the burden of proving that he was not aware and had no reason to believe that his acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $100.

Present section 412 was also put in place (although numbered temporarily as section 411). Section 504(c) of the 1965 bills contained a number of important changes from the 1964 bills. In explaining the changes with respect to multiple infringements, the Register of Copyrights stated:

In an action under the bill involving more than one infringement—whether the infringements are separate, isolated, or occur in a related series—a single award of statutory damages in the $2500–$10,000 range could be made under the following circumstances:(1) Where the infringements are all of “any one work.” This marks a change from the 1961 Report's recommendations, which would have provided a single recovery of statutory damages for all infringements for which the infringer is liable. Under the bill, where separate works are involved, separate awards of statutory damages could be made. However, the bill makes clear that, although they may constitute separate works for other purposes, “[f]or the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.” Note that the criterion here is the number of distinct “works” infringed, and not the number of copyrights, exclusive rights, owners, or registrations involved.(2) Where, with respect to the infringements in question, “any one infringer is liable individually, or any two or more infringers are liable jointly and severally.” Where the infringements in suit were committed by joint tortfeasors, the bill specifies a single award of statutory damages for which they would be jointly and severally liable. Where, however, separate infringements, for which two or more defendants are not jointly liable, have been joined in the same action, separate awards of statutory damages could be made.The relevant language did not change after this. The committee report in 1976 explains: Where the suit involves infringement of more than one separate and independent work, minimum statutory damages for each work must be awarded. For example, if one defendant has infringed three copyrighted works, the copyright owner is entitled to statutory damages of at least $750 and may be awarded up to $30,000. Subsection (c)(1) makes clear, however, that, although they are regarded as independent works for other purposes, “all the parts of a compilation or derivative work constitute one work” for this purpose. Moreover, although the minimum and maximum amounts are to be multiplied where multiple “works” are involved in the suit, the same is not true with respect to multiple copyrights, multiple owners, multiple exclusive rights, or multiple registrations. This point is especially important since, under a scheme of divisible copyright, it is possible to have the rights of a number of owners of separate “copyrights” in a single “work” infringed by one act of a defendant.The purpose for the limitation on statutory damages for elements of collective works was sound, reflecting dissatisfaction with the 1909 Act, and compromising competing views of how damages should work under the 1976 Act: the compromise preserves the ability of copyright owners to get damages of up to $150,000 per work – an amount quite generous enough to satisfy the economic harm to all constituent elements while not crippling penalties out of all proportion to any harm suffered. Section 104 of H.R. 4297 will run roughshod over the careful and correct approach taken by the Copyright Act, and without any changed circumstances justifying such a dramatic change.

There is one final provision I would like to note, those dealing with civil forfeiture:

g) Forfeiture and Destruction; Restitution- `(1) CIVIL FORFEITURE PROCEEDINGS- (A) The following property is subject to forfeiture to the United States: `(i) Any copies or phonorecords manufactured, reproduced, distributed, sold, or otherwise used, intended for use, or possessed with intent to use in violation of section 506(a) of title 17, and any plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be made and any devices for manufacturing, reproducing, or assembling such copies or phonorecords. `(ii) Any property constituting or derived from any proceeds obtained directly or indirectly as a result of a violation of section 506(a) of title 17. `(iii) Any property used, or intended to be used, to commit or facilitate the commission of a violation of section 506(a) of title 17 that is owned or predominantly controlled by the violator or by a person conspiring with or aiding and abetting the violator in committing the violation.The idea that criminal forfeiture provisions, drafted to reach major drug traffickers like the Columbian cartels, should be inserted into civil copyright tort provisions with a preponderance of the evidence burden, is mind-blowing. The capacity – if not intent – of these provisions for profound mischievousness is obvious: in addition to the gluttonous statutory damages that would be available, content owners now want to defendants to forfeit their computers, their cars, and their homes: all of these can be said to have been used in the commission of infringement (say defendant uses his phone to call someone else involved in the infringement and says “meet me at 11 at Moe’s).

But the bill goes even further: it is not only property actually used that is subject to forfeiture, property that wasn’t used but was “intended to be used” can also be seized. Say, a defendant intended to use his car to transport a computer used in connection with infringement, civil infringement, but decided to take his wife’s car instead. Under the bill, both cars, the computer, and the house where the cars and the computer are stored can be forfeited. But there is more: the bill also includes property “derived from any proceeds obtained directly or indirectly” as result of civil infringement. A television, children’s toy, anything that a defendant owns could fall within this: how could one disprove that any property purchased in the relevant time period was not indirectly derived from infringement. Is even gluttony enough to describe this?

For those who think I am overreacting, I will mention a single case that involved a fact setting where actual criminal conduct was involved, and not, as here, a mere civil, economic tort. The case involved forfeiture of a fishing boat based on a crew member’s possession of marijuana, a fact the owner of the boat knew nothing of. Here is a description of the case from a faculty blog at the University of Missouri-Kansas City Law school blog, a site that includes other examples so you don’t think I have picked an atypical one:

Kevin Hogan and a crew of three headed for Alaska in a $ 140,000 fishing boat he had just purchased in Washington. The boat developed engine problems along the route and was forced to stop briefly in Canada for repairs. The Canadian stop was reported to customs agents in Ketchikan, who searched the boat. The search revealed that one of Hogan's three crewmembers had 1.7 grams of marijuana in his jacket. Customs officials acknowledged that Hogan knew nothing about the marijuana aboard his boat, the Hold Tight. Under the "Zero Tolerance" program initiated less than two months earlier, even small amounts of drugs could result in arrests and forfeitures of property. Customs agents decided to seize Hogan's boat. Hogan had planned to use the boat during Alaska's twenty-four hour halibut season later that month. The halibut catch could have netted Hogan the $ 40,000 he needed to pay the mortgage on the Hold Tight. Hogan said as a result of the seizure, "I stand to lose it all in this deal," referring to everything for which he had worked during the prior fifteen years. In Hogan's hometown of Homer, Alaska, more than 1,000 people signed petitions supporting Hogan. The city council passed a resolution urging that Customs officials show "some sense of proportionality" in the Hogan case. The Customs Service expressed its position in a letter written by John Elkins, acting director of the Service's regulatory procedures and penalties division in Washington, D.C., to the Customs Service's Anchorage office. Elkins said that it is not enough to warn crewmembers of the drug program, as Hogan said he had done. Elkins contended that Hogan was negligent in not detecting the marijuana: "It is our view that Kevin Hogan was, as owner and master, responsible for the actions of crew members." So this it: a Zero Tolerance approach to a civil, economic tort, copyright infringement. The dangers in the new Zero Tolerance to copyright go far beyond the individuals swept within its net, although that is bad enough: the Zero Tolerance approach threatens respect for law itself. People do not obey laws they abhor, and there is much to abhor in H.R. 4279. Copyright owners have proved themselves incapable of understanding their customers and the public’s outrage over the direction copyright has taken; perhaps they delude themselves into thinking that the opprobrium comes from those who don’t respect law anyway; but it doesn’t: it also comes from those like Sir Hugh and I who love copyright law and who have devoted our professional careers to it. If section 104 and the civil forfeiture provisions of H.R. 4297 pass, there will be many others.

About Me

This is a personal blog, not a Google blog. It is about my book Moral Panics and the Copyright Wars, published by Oxford University Press. Please don't attribute anything in the blog or the book to Google, which employs me.